Feed companies hard hit by economic crisis

Some are expanding, while others are putting together refinancing packaging.

In northern Europe, Sweden has been hit relatively hard by the international crisis, suffering a greater fall in national GDP than in the USA, the neighboring Baltic states or the OECD grouping of industrial nations.

Various concerns in Swedish farming reflect the wider international scene, however, such as the fall-out from the global surplus of milk that has sent dairy profits tumbling and dragged down the demand for cattle feed.

Expansion

But some feed companies have continued expansion plans.

Charoen Pokphand, or CP, the Thailand-based conglomerate, acquired a one-third shareholding in Taiwanese feed manufacturer and meat processor CP Enterprise (Taiwan) — formerly known as Taiwan Pokphand Feed Co — for the equivalent of US$24 million, which Adirek Sripratak, CP president and CEO, described as part of a strategy to increase the revenue from overseas operations.

He said the company planned to spend up to 2.5 billion Baht for business expansion overseas. CPF additionally is expanding into the Middle East and North Africa, including in aquaculture, and is growing further in Vietnam by completing an aqua feed plant and a chicken complex.

Refinaning

Some companies are putting together refinancing deals to buoy them up for the future. Known as an asset based lending package, a refinancing package for UK-based BOCM Pauls has been secured against the value of the company’s sales ledger, property, plant and machinery and includes a UK£55 million accounts receivable facility.

The lender commented that the ability to finance using a facility linked directly to the value of the debtors and inventory was very attractive to working capital intensive businesses, as it enabled BOCM to borrow against existing assets in order to free up the cash-flow required to execute a growth strategy.

BOCM also has confirmed a new UK£1 million investment to upgrade and expand a flagship mill in eastern England that is one of 20 plants it operates nationwide. The Bury St Edmunds mill produces over 40,000 tons/year and is rated by the company as the largest speciality feed production unit of its kind in Europe. Most of its current production takes the form of piglet creep and starter rations.

Peter Best is a consulting editor for Pig International and can be reached at pbest@wattnet.net.